Attachments

Solution Preview

(a) Use these data to estimate the relationship for each of the years 1988 and 1989.
TAXt= à?1 + à?2 incomet + et

Using OLS regression by EXCEL data analysis (or any other statistical software), we can get the following results:
For 1988: TAXt = -0.018 + 0.176 income + et
For 1989: TAXt = -0.1085 + 0.2266 income + et

(b) Give brief ...

Solution Summary

Find the average income and average tax for each year, and compare the average tax rate and marginal tax rate for each year.

Education

Recent Feedback

"Thanks for your fast response! That follows a lot with what I was thinking. There is still an argument made by a friend of mine for the number 9 that he swears is the only correct answer by using an "invisible multiplier"."